Germany’s government has reached agreement on legislation that obliges German companies to carry out due diligence regarding human rights and environmental issues in supply chains globally, government sources told Reuters on Friday.

The legislation will apply to more than 600 companies that employ at least 3,000 staff from 2023 and to around 2,900 companies with more than 1,000 staff from 2024, according to a document seen by Reuters.

Critics have warned that the Supply Chain Act would make companies liable for health and environmental damage claims made by environmental non-government organisations, exposing them to unlimited financial risk if those companies are unable to force their suppliers to conform to their requirements.

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